Kadant Inc · NYSE:KAI
Kadant — Q3 2022 Earnings Presentation
24 slides from Kadant's earnings presentation, Nov 1, 2022
Slide 1: Third Quarter 2022 Business Review
Third Quarter 2022 Business Review November 2, 2022 Exhibit 99.2
Slide 2: Forward-Looking Statements
Forward-Looking Statements The following constitutes a “Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This presentation contains forward-looking statements that involve a number of risks and uncertainties, including forward-looking statements about our future fin
Slide 3: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures In addition to the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures, including increases or decreases in revenue excluding the effect of acquisitions and foreign currency
Slide 4: Business Review
BUSINESS REVIEW Jeffrey L. Powell, President & CEO 4KAI 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED.
Slide 5: Operational Highlights
Operational Highlights • Solid execution by our businesses led to record adjusted EPS* and adjusted EBITDA* • Strong aftermarket parts demand continued into Q3 • Capital project activity moderated across certain segments and product lines KAI 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. A
Slide 6: Q3 2022 Performance
Q3 2022 Performance 6 ($ in millions, except per share amounts) Q3 22 Q3 21 Change Revenue $224.5 $199.8 +12.4% Net Income $27.5 $20.5 +34.3% Adjusted EBITDA* $47.8 $40.9 +17.1% Adjusted EBITDA Margin* 21.3% 20.5% +80 bps Diluted EPS $2.35 $1.75 +34.3% Adjusted Diluted EPS* $2.38 $1.97 +20.8% Operat
Slide 7: Flow Control
7 ($ in millions) Q3 22 Q3 21 Change Revenue $86.9 $76.3 +13.9% Bookings $84.9 $76.7 +10.7% Adjusted EBITDA* $25.6 $22.2 +15.4% Adjusted EBITDA Margin* 29.4% 29.1% +30 bps HIGHLIGHTS • Strong aftermarket demand and capital project activity • Organic bookings up 19% • Record adjusted EBITDA* performa
Slide 8: Industrial Processing
8 ($ in millions) Q3 22 Q3 21 Change Revenue $86.1 $81.6 +5.5% Bookings $77.9 $118.9 -34.5% Adjusted EBITDA* $20.7 $19.5 +6.2% Adjusted EBITDA Margin* 24.0% 23.9% +10 bps HIGHLIGHTS • Capital bookings down from a record Q3 21 • Strong demand for aftermarket parts • Aftermarket parts revenue represen
Slide 9: Material Handling
9 ($ in millions) Q3 22 Q3 21 Change Revenue $51.5 $41.9 +23.0% Bookings $48.1 $49.1 -2.1% Adjusted EBITDA* $10.0 $7.2 +39.8% Adjusted EBITDA Margin* 19.5% 17.1% +240 bps HIGHLIGHTS • Demand was exceptionally strong for our bulk material handling equipment for both parts and capital, offset by softe
Slide 10: Business Outlook
Business Outlook • Demand expected to moderate as macroeconomic headwinds strengthen • Supply chain constraints and inflationary pressures continue to be a challenge • Expecting to generate record earnings in fiscal 2022 10KAI 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERV
Slide 11: Financial Review
FINANCIAL REVIEW Michael J. McKenney, EVP & CFO KAI 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 11
Slide 12: Q3 2022 Financial Performance
Q3 2022 Financial Performance ($ in millions, except per share amounts) Q3 22 Q3 21 Gross Margin 42.5% 41.9% SG&A % of Revenue 23.7% 26.2% Operating Income $38.9 $28.7 Net Income $27.5 $20.5 Adjusted EBITDA* $47.8 $40.9 Diluted EPS $2.35 $1.75 Adjusted Diluted EPS* $2.38 $1.97 HIGHLIGHTS • Adjusted
Slide 13: Key Consolidated Financial Metrics
Key Consolidated Financial Metrics KAI 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 13 SG&A (as a % of revenue) GROSS MARGIN ADJUSTED EBITDA MARGIN* CASH FLOW ($ in millions)
Slide 14: 3Q21 to 3Q22 Adjusted Diluted EPS
2Q21 ADJ EPS* 2Q22 ADJ EPS* KAI 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 3Q21 to 3Q22 Adjusted Diluted EPS* 14
Slide 15: Key Liquidity Metrics
Key Liquidity Metrics KAI 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 15 ($ in millions) Q3 22 Q2 22 Q3 21 Cash, cash equivalents, and restricted cash $75.1 $78.0 $83.7 Debt $207.9 $223.8 $309.4 Lease obligations $1.8 $4.5 $5.1 Net Debt $134.6 $150.3 $230.8 Leverage
Slide 16: Guidance
Guidance KAI 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 16 • FY 2022 GAAP diluted EPS of $10.02 to $10.19 • FY 2022 adjusted diluted EPS* of $8.80 to $8.97 • FY 2022 revenue of $890 to $896 million • Q4 2022 GAAP diluted EPS of $1.90 to $2.07 • Q4 2022 revenue of $2
Slide 17: Questions & Answers
Questions & Answers To participate in the live Q&A session, please go to investor.kadant.com and click on the Q&A session link to receive a dial-in number and unique PIN. Please mute the audio on your computer. KAI 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 17
Slide 18: 2022 Key Priorities
2022 Key Priorities 18 ACCELERATE SUSTAINABLE INDUSTRIAL PROCESSING DELIVER EXCEPTIONAL STAKEHOLDER VALUE PROVIDE STRONG CASH FLOW CAPITALIZE ON NEW OPPORTUNITIES KAI 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED.
Slide 19: Investor Relations Contact
INVESTOR RELATIONS CONTACT Michael McKenney, 978-776-2000 IR@kadant.com MEDIA RELATIONS CONTACT Wes Martz, 269-278-1715 media@kadant.com November 2, 2022
Slide 20: Appendix
APPENDIX Third Quarter 2022 Business Review KAI 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 20
Slide 21: Revenue by Customer Location
Revenue by Customer Location ($ in thousands) Q3 22 Q3 21 Change Change Excluding Acquisitions and FX* North America $126,699 $105,384 $21,315 $22,577 Europe 57,409 58,813 (1,404) 8,308 Asia 26,953 25,504 1,449 3,585 Rest of World 13,449 10,088 3,361 4,115 TOTAL $224,510 $199,789 $24,721 $38,585 KAI
Slide 22: Adjusted Diluted EPS Reconciliation
Adjusted Diluted EPS Reconciliation Q3 22 Q3 21 Diluted EPS, as reported $2.35 $1.75 Acquisition Costs, Net of Tax 0.02 0.05 Restructuring Costs, Net of Tax 0.01 — Acquired Backlog Amortization, Net of Tax — 0.04 Acquired Profit in Inventory Amortization, Net of Tax — 0.13 Adjusted Diluted EPS* $2.3
Slide 23: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures. Adjusted EBITDA margin is calculated by dividing adjusted EBITDA in a given period by revenue in the same period. ($ in thousands) Q3 22 Q3 21 Net Income Attributable to Kadant $27,487 $20,461
Slide 24: Notes
Notes PRESENTATION NOTES • All references to EPS (earnings per share) are to our EPS as calculated on a diluted basis. • Percent change in slides 6-9 is calculated using actual numbers reported in our press release dated November 1, 2022. FOOTNOTES 1. Leverage ratio is calculated by dividing total d